An excerpt of BlackRock Larry Fink’s 2025 Annual Chairman’s Letter to Investors

Today, many countries have twin, inverted economies: one where wealth builds on wealth; another where hardship builds on hardship. The divide has reshaped our politics, our policies, even our sense of what’s possible. Protectionism has returned with force. The unspoken assumption is that capitalism didn’t work and it’s time to try something new.

Markets, like everything humans build, aren’t perfect, but always improvable. The solution isn’t to abandon markets; it’s to expand them, and let more people own a meaningful stake in the growth happening around them.

Unlocking private markets

As we enter our century’s second quarter, there’s a growing mismatch between the demand for investment and the capital available from traditional sources.

Governments can’t fund infrastructure through deficits. They’ll turn to private investors. Companies won’t rely solely on banks for credit. Bank lending is constrained. Businesses will go to the markets. The capital markets stand alongside as a coequal source of capital.

Assets that will define the future – data centers, ports, power grids, the world’s fastest-growing private companies – are in private markets, locked behind high walls, with gates that open only for the wealthiest or largest market participants.

Private markets don’t have to be as risky. Or opaque. Or out of reach. Not if the investment industry is willing to innovate – and that’s exactly what we’ve spent the past year doing at BlackRock.

In the past 16 months, we’ve announced the acquisition of two of the top firms in the fastest-growing areas of private markets: infrastructure and private credit. We bought another firm to get better data and analytics, so we can better measure risk, spot opportunities, and unlock access to private markets.

The $68 trillion investment boom

Throughout history, infrastructure has driven a surprising amount of economic growth. Investments in the U.S. interstate system accounted for about a quarter of productivity gains between 1950 and 1989.1

Today, we’re standing at the edge of an opportunity so vast it’s almost hard to grasp. By 2040, the global demand for new infrastructure investment is US$68 trillion.2  The markets are eager to step in where governments and corporations are stepping out.

From 60/40 to 50/30/20

The beauty of investing in private markets isn’t about owning a particular bridge, tunnel, or mid-sized company. It’s how these assets complement your stocks and bonds – diversification.

The classic 60/40 portfolio may no longer fully represent true diversification. The future standard portfolio may look more like 50/30/20 – stocks, bonds, and private assets like real estate, infrastructure, and private credit. While these private assets may carry greater risk, they also provide great benefits – inflation protection, stability, and returns.

The divide between public and private markets is a tough problem – but it’s solvable. In fact, BlackRock has solved market challenges like this before.

Before public vs. private, there was index vs. active

In 2009, BlackRock acquired Barclays Global Investors. They had created iShares, the leading ETF business in the world.

When we combined active and index strategies under one roof, we gave investors something they’d never had before: the freedom to blend strategies seamlessly.

Now, we see an opportunity to do for the public-private market divide what we did for index vs. active. In October 2024, BlackRock completed the first of three acquisitions – Global Infrastructure Partners (GIP) – to erase the boundary holding investment back.

GIP owns some of the world’s most important infrastructure assets on behalf of our clients – London’s Gatwick Airport, key energy pipelines, and over 40 global data centers.

They’re experts at finding the world’s most attractive infrastructure investments, and channeling capital to build or improve them. GIP is itself a pipeline – connecting BlackRock’s clients directly to the world’s US$68 trillion infrastructure boom, including data centers.

At the same time we were finalizing the GIP deal, BlackRock was also busy with two other significant acquisitions – Preqin and HPS Investment Partners. These acquisitions will give our clients more direct access to private markets – the kind that finance global businesses and keep consumer economies running.

For decades, private markets have been among the most opaque corners of finance. Our acquisitions are designed to change that. For instance, Preqin provides the industry’s most comprehensive private markets data set, tracking over 190,000 funds and 60,000 managers. This rich data set provides clarity on performance across managers and funds, and it also offers comparable valuations for the assets they own.

With clearer, more timely data, it becomes possible to index private markets just like we do now with the S&P 500. Once that happens, private markets will be accessible, simple markets. And capital will flow more freely throughout the economy. The prosperity flywheel will spin faster, generating more growth – not just for the global economy or large institutional investors, but for investors of all sizes around the world.

Markets never exist in isolation. The economic rules we choose, the investment policies we adopt, and the ways countries attract and deploy capital will determine who benefits – and how broadly prosperity spreads.

1. Federal Reserve Bank of Richmond, When Interstates Paved the Way, (2021). Note: According to research by the Federal Highway Administration (FHWA)
2. Global Infrastructure Hub (gihub.org), Deloitte. Infrastructure needs defined as new investment, replacement investment and spending on maintenance where the investment will substantially extend the lifetime of an asset but excluding land purchases. Needs determined on the basis that countries match the performance of their best performing peers in terms of the resources they dedicate to infrastructure investment. Investment need calculated from 2024-2040